Te Puni Kokiri (TPK) recently told the Government that Maori were lagging behind the rest of the population and it wanted to lead the turn around, documents show.
But just weeks later Maori Affairs Minister Pita Sharples has confirmed job losses at TPK as part of "efficiency" measures.
Prime Minister John Key says National agrees with Sharples that TPK needs restructuring.
The Government was living in tight constraint and TPK was shedding parts of its current workload and redirecting the resources, he said.
"We agree with him that there's need for change and I think all New Zealanders to see their tax dollars spent wisely."
In the Briefing to the incoming minister, released today, TPK said socio-economic indicators had improved overtime but Maori had deteriorated compared to the rest of the population.
"We have become increasingly concerned about the socio-economic status of Maori."
Maori households spent $5 billion more annually than they earned and transfer payments to Maori now exceeded tax paid by Maori, the report said.
It said Government had focused on supporting Maori aspiration and potential but greater attention needed to be paid to the quality of Maori outcomes.
That provided an opportunity to "exercise a greater level of leadership in management of Crown-Maori and Crown-iwi relationships".
But rather than increasing its presence, TPK has announced 50 of its 350 staff would be made redundant.
NZ First leader Winston Peters said the job cuts were part of a Government plan to scrap the ministry and put the funding into Whanau Ora.
He said TPK had been made the scapegoat of an ''appalling trade off'' between National and the Maori Party to fund the Maori Party's flagship Whanau Ora programme.
But Key said today the Government had no intention of getting rid of TPK entirely, despite Peters comments.
"Winston Peters may not have a view that getting taxpayers value for money is important, I do, and that'll just be another thing that we agree to disagree on."
Whanau Ora, which is overseen by Maori Party co-leader Tariana Turia, is an inclusive approach to providing services and opportunities to whanau (Maori families).
There was no evidence Whanau Ora would work, Peters said.
''Maori people are about to see what a disaster that is.''
Sharples was not speaking publicly about the TPK cuts because his party was behind the move, he said.
''Tariana Turia has a history of taking funding for pet projects and imposing ideas from a flimsy understanding and background which Maori people need to know more about.''
Meanwhile Labour says the ''gutting'' of TPK was a result of Sharples being a minister outside Cabinet and not being able to fight for his ministry.
Labour's Maori Affairs spokesman and former Maori Affairs minister, Parekura Horomia, said Sharples was forced to take his requests to Government.
''Like any other company or organisation, you have be around the table when all the detail is being discussed.''
TPK, which advises the Government on Maori issues and development, was only as big as sections of large ministries.
''You take 50 [staff] out and that's a huge hole in the organisation.''
TPK was the cornerstone in the connection between government agencies, Maori businesses, iwi and whanau.
Mana Party leader Hone Harawira said TPK was the only government department Maori had ever had faith in.
The cut backs would result in branch office closures and the ministry being stripped of a number of its functions, he said.
''These changes will cripple Maori development.
''There will be no longer be a single source for advocacy on Maori culture, Maori language, Maori broadcasting, Maori intellectual property rights, Maori economic development, Matauranga Maori, marae development and Maori land and resource development.''
In a statement last night, Sharples said how TPK managed its fiscal pressures was an operational matter but he expected to be consulted on any changes before they were finalised.
It was an uncertain time for staff.
''So I feel aroha for the staff and their families at this time," Sharples said.
''While the impacts of the fiscal environment on public sector reform have been widely known, the challenges at an individual and whanau level can be hard.''
The situation of staff was being made worse by political grandstanding, he said.
The Public Service Association estimates there have been 2400 job losses in the state sector since National came to office in 2008.
- The Dominion Post
Should the speed limit be raised to 110kmh on some roads?Related story: 110kmh limit moves closer